Four principles of equity investments basically anyone can apply the legendary Peter Lynch

During fell on Wall Street, Lynch was a teacher specializing in inspiring doctrinal value investment for many investors investment in securities cases. He left his heart in three books: Defeat market, On Wall Street and Learning to earn profits. In his book On the top of Wall Street, Lynch shared the view that the individual investor can beat the increase of funds from the karma-fund managers have become one of the awards honor the price that many people in the investment community to pay attention to for years.

Investment philosophy of Peter Lynch gave him very high profit in 23 years of operating funds Magellan, but it turned out very simple, easy to apply and are listed under the four perspectives following: thorough research, understand the importance of diversification, patience and invest in something that you know

1. themselves scrutinized

by participating in research many stocks in many different industries, domestic and foreign, Lynch maximize search capabilities companies bring prospects in the future. Lynch said that every individual investor can use his experience to beat the growth rates of the big fund managers. He said that there are many disadvantages when managing large sums of money and individual investors have many advantages.

"Everyone has been given the wisdom to win the stock market. If you have studied in math class, you can do it" - Peter Lynch.

Lynch said that the ultimate goal is still the choice of high-quality businesses with large growth potential. He also stressed businesses with the simple economic model. Investors can refer businesses high quality through a number of a group: eg heading Dividend aristocrats and Dividend Kings, here are two sets on the S & P 500 is classified based on:

Enterprises with blocks property firm, doing profitable long (income shares rise only if the business is a profitable increase, calculated over a period of several decades refill)

Shareholders continually receive income from the shares through many years

Dividend aristocrats group set of listed companies and the dividends paid to shareholders for 25 consecutive years, the group is 50-year Dividend Kings.

2. Understand the importance of diversifying

the late in his career, Lynch has more than 1,000 stocks in the portfolio. Apart from diverse number of stocks, Lynch also diversify the number of sectors in the portfolio. Lynch also based on the characteristics of the expected growth of the stocks he chose to split into three groups as follows:

- Hot Growth Company shares income with an expected range of 20% -50% (Lynch never invest in companies expect growth> 50% by that is that the company is unstable)

- Group health: companies with capitalization of tens of billions of dollars and expected income received about 10-20%

- Low growth: The company had expected revenue shares less than 10% but predicted willingness to pay dividends well

Lynch said that the group health and group lower growth will bring stable profit, while the rapid growth will only take effect as a major energy source of growth (speed unsurpassed market). The difference of Lynch with other investors in strategic differentiation diversified asset is that he is very careful, not often choose to buy shares little more promising, it helps to block the assets of the fund are not significant fluctuations.

"Diversification in worse" (diworsesification) is a term that Lynch used only portfolios diversified, but some trading activity too often reduces their profits by increasing charges trading and investment ideas turn their best at times become bad ideas

3. patients

In more than 20 years, Lynch's Wharton University Pennsylvania